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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business app. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: I think the schedule is for the SpaceX IPO roadchhow

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Speaker 2: to start tomorrow.

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Speaker 3: Haven't seen a schedule, but that's what I'm hearing that.

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Speaker 4: Yeah, but this IPO is kind of progressing unusually. Yes,

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Speaker 4: it's so mammoth and they, you know, the company can

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Speaker 4: kind of call the shots on everything. And our reporting

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Speaker 4: shows that SpaceX's offering shares at one hundred and.

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Speaker 3: Thirty five dollars each.

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Speaker 4: If it gets that Elon Musk's net worth would be

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Speaker 4: just shy of a trillion dollars. It put him at

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Speaker 4: nine hundred and eighty eight billion dollars.

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Speaker 3: All right, here's the problem.

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Speaker 2: If you're an investor looking at this ipo, you don't

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Speaker 2: have any research. There's no research from Wall Street except

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Speaker 2: for Bloomberg Intelligence. George Ferguson joins us here. He is

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Speaker 2: a senior aerospace as analyst at Bloomberg Intelligence. He's got

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Speaker 2: a monster primer research report on SpaceX, So if you

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Speaker 2: have access to the Bloomberg terminal, you could find it

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Speaker 2: there under the aerospace dashboard a bi go and it

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Speaker 2: tells you everything you need to know about this company

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Speaker 2: and how stacks up relative to the comps and kind

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Speaker 2: of the market opportunities and all that kind of stuff.

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Speaker 3: That's the research, and you won't get street research for

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Speaker 3: a while.

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Speaker 2: So this is it on Global Wall Street. George joins us. Now, George,

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Speaker 2: what do you think the message is going to be

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Speaker 2: from Elon and Company regarding this company? Because boyd, it

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Speaker 2: is an expansive company with an expansive vision.

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Speaker 3: What do you think the message is going to be.

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Speaker 5: Yeah, Look, I think it's all about AI in the

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Speaker 5: future and the optimal way to deliver it, right, And

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Speaker 5: so I think that the space business, the lift business,

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Speaker 5: really supporting that satellite constellation Stark, which is all about

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Speaker 5: communications between the Earth surface and low Earth orbit. I

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Speaker 5: think that's interesting, but it's not I think a huge

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Speaker 5: value proposition. Right, you're trying to you'll be competing with

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Speaker 5: terrestrial providers that I think can do much better in

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Speaker 5: populated centers. So I think the big, big big sort

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Speaker 5: of opportunity here would be if data centers are going

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Speaker 5: to work in space, and AI is a big thing

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Speaker 5: in the world, You're going to be able to from

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Speaker 5: the surface of the Earth shoot your data request into

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Speaker 5: space and data centers in space will work out all

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Speaker 5: those things you need to know via AI and get

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Speaker 5: it back to you. I think you're betting on that

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Speaker 5: in the long run if you're buying into this into

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Speaker 5: the space X IPO.

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Speaker 4: George, we talk about how your title is the aerospace,

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Speaker 4: defense and airlines analysts. What kind of company is SpaceX

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Speaker 4: now is what is the comparable company? What group should

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Speaker 4: be considered a peer to?

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Speaker 2: Yeah?

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Speaker 5: So I mean when we built our value, shouldn't thought

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Speaker 5: about what was potentially, you know, plausible given current markets.

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Speaker 5: We really had to do with some of the parts, right,

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Speaker 5: So I went out and looked at the rocket business

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Speaker 5: against those peers like rocket Lab. My colleagues John Butler

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Speaker 5: went out and looked at Starlink based on some peers

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Speaker 5: as well, and then Man Deep Sing did it based

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Speaker 5: on AI. The biggest value that actually came out of

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Speaker 5: Rocket Lab. So I came out of the rocket business,

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Speaker 5: which is a little bit surprising to me. But I

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Speaker 5: still think sort of the you know, the long term

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Speaker 5: play here is the data center in space and AI.

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Speaker 5: So but we had we had to combine again analysis

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Speaker 5: and all those industries to really come up with what

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Speaker 5: we thought maybe a plausible valuation, albeit extremely lofty valuation,

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Speaker 5: would be.

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Speaker 3: Is there an expectation, George, that.

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Speaker 2: Elon may look to just kind of consolidate all of

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Speaker 2: his holdings within SpaceX, i e.

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Speaker 3: Roll up Tesla into SpaceX.

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Speaker 2: Is that something that when you talk to investors that

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Speaker 2: they think is possible?

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Speaker 3: Likely?

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Speaker 5: I hear noise like that. I mean, look, I think,

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Speaker 5: you know, when I look at the current SpaceX I

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Speaker 5: see the reason to put these three companies together again.

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Speaker 5: Sort of, the launch business gets your satellite constellations up

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Speaker 5: in the air. He's got the largest satellite constellations. Starlink

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Speaker 5: by far is the largest of any satellite constellation lower

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Speaker 5: with orbit. So the launch business gets those satellites up there,

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Speaker 5: it serves Starlink. And then again as AI comes in,

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Speaker 5: if you're going to put the data centers in space,

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Speaker 5: you've got to drive down the cost of drive of

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Speaker 5: getting things into orbit. And again your launch business matters,

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Speaker 5: and you know, you obviously need communications to get to it.

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Speaker 5: So I see how all three of those fit together.

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Speaker 5: I don't see how Tesla fits inside that mold. Now, look,

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Speaker 5: I think these all three of these are together because

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Speaker 5: AI needs a fair amount of financing. Right now, we're

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Speaker 5: seeing that all around the marketplace, right AI companies are

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Speaker 5: looking to raise funds to build data centers, build out

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Speaker 5: their models, make sure they're super competitive. So so look,

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Speaker 5: I think Elon could do. You could see him do

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Speaker 5: things for financing reasons that may not make sense from

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Speaker 5: you know, a company level reason. Right now, I see

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Speaker 5: the reason these three are together because they seem to

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Speaker 5: be supporting each other.

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Speaker 4: So, George, when SpaceX is a publicly traded company listed

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Speaker 4: on the NASAC under the CHICK or spc X and

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Speaker 4: it needs more money to fund its AI build out,

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Speaker 4: how's it going to get that money?

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Speaker 3: Is it going to sell more stock? Is it going

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Speaker 3: to go to the debt market? What are you thinking?

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Speaker 5: Well, I mean, right now, they're not selling all the

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Speaker 5: all the stock, you know they're they're not. They're not

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Speaker 5: listing sort of the full value this company on the exchanges.

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Speaker 2: Uh.

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Speaker 5: But but so so my sense is they probably could

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Speaker 5: sell more stock to raise money. Uh, and then I

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Speaker 5: think it's just, you know, it opened up the ability

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Speaker 5: to go into public markets and take public debt and

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Speaker 5: sort of I guess maybe get out of the venture

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Speaker 5: capital world a little bit. But look, I mean, I

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Speaker 5: guess we'll see. It still seems like a really hard

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Speaker 5: It's not a company that you're going to bank, right

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Speaker 5: the major banks of the world are going to show

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Speaker 5: up and say, we like the financi of the metrics

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Speaker 5: just aren't there for that some very specuative you know,

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Speaker 5: bond investors could potentially get involved. It still feels like

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Speaker 5: largely and you know, an equity fundraising kind of story

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Speaker 5: to make.

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Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, cock Play and

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Speaker 1: Android Auto with the Bloomberg Business app. Listen on demand

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Speaker 1: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 4: We continue to look for details on this gigantic IPO

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Speaker 4: coming out from SpaceX. The latest reporting indicates that the

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Speaker 4: company plans to offer shares at one hundred and thirty

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Speaker 4: five dollars a piece that wants to raise seventy five

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Speaker 4: billion dollars in its IPO. And you know the fact

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Speaker 4: that it's kind of pinpointed a price already makes it

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Speaker 4: different than your typical IPO where companies announce a price

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Speaker 4: range as they get ready to market the shares during

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Speaker 4: these investor road shows. Let's bring in Godamakunda. He is

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Speaker 4: a lecturer at the Yale School of Management. He's also

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Speaker 4: a contributor to Bloomberg Opinion, and he's written about governance

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Speaker 4: at SpaceX, or perhaps lack of governance at SpaceX, and

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Speaker 4: got him. I want to start with this idea that

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Speaker 4: SpaceX's IPO is shaping them to be kind of a

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Speaker 4: departure from the norm. And you say that that's the

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Speaker 4: case with its governance as well, what have you spotted

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Speaker 4: in the paperwork that is filed that really shows its

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Speaker 4: defying convention.

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Speaker 6: They basically surrounded Elon Musk with rights and privileges and

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Speaker 6: special voting shares and rules and things like that that

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Speaker 6: make him. You know, the phrase I used in the

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Speaker 6: column was he's now the god king of like he

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Speaker 6: can never be fired. He has total control. No one

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Speaker 6: the organization has any ability to put a brake on him,

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Speaker 6: no shareholders the anability to put a break on him.

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Speaker 6: A lot of CEOs have been doing a lot to

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Speaker 6: concentrate power in their own hands, but I don't think

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Speaker 6: I've ever seen anything quite.

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Speaker 3: Like this Gotham.

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Speaker 2: It kind of makes sense, my guess, if I were

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Speaker 2: an investor taking a meeting here for this IPL, all

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Speaker 2: I want to hear is from Elon Musk and what

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Speaker 2: his vision is and how he thinks he can get

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Speaker 2: there and get chief profitability.

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Speaker 3: I don't care what the CFO says, I don't care

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Speaker 3: what anybody else says.

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Speaker 2: I just need to dial in on Elon because it's

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Speaker 2: a bet on Elon.

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Speaker 3: Maybe that's not reflected in the governance. No, I think

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Speaker 3: that's right.

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Speaker 6: And look, if you are, you know, a major institutional

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Speaker 6: investor and you decide to go in on SpaceX, you

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Speaker 6: do it because you are bought in on the story

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Speaker 6: of Elon Musk, and you might have lots of reasons

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Speaker 6: to buy it on that.

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Speaker 3: You might have made a lot of money on him.

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Speaker 6: There are two problems with that logic, and it's important

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Speaker 6: to help to highlight both of them. The first one

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Speaker 6: is a lot of the people who are investing in

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Speaker 6: SpaceX are not people who are buying into into the

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Speaker 6: logic the story of Elon Musk, their index fund people

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Speaker 6: who hold index funds, people in their four O one

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Speaker 6: ks who are just going in because it's in the index.

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Speaker 6: And because all of these institutions from you know, including

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Speaker 6: NASDAK that are supposed to put boundaries and guardrails and

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Speaker 6: protect instant investors like that, investors who because they're in

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Speaker 6: index funds literally cannot protect themselves. All of them have

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Speaker 6: fallen down on the job and decided that they're not

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Speaker 6: going to do that. So that's the first problem. But

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Speaker 6: the second problem, which it is just as important, which is,

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Speaker 6: however brilliant you think Elon Musk is, what, even if

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Speaker 6: you think he is the greatest business person who's ever lived,

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Speaker 6: there's no such thing as as a person who is

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Speaker 6: so brilliant they don't get better when other people test

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Speaker 6: and push their ideas. And this is a structure that's

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Speaker 6: designed to make sure that no one has the ability

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Speaker 6: to force Elon Musk to be the best version of

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Speaker 6: himself and not the worst one.

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Speaker 4: Well, I mean, SpaceX is not unusual in that it's

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Speaker 4: giving its some you know, leader of free hand you

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Speaker 4: point this out that Google's two thousand and four IPO

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Speaker 4: kind of codify this dual class shares into the tech

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Speaker 4: industry meta or then Facebook did something similar, So in

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Speaker 4: that way, this is a tried and true formula for

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Speaker 4: big tech companies.

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Speaker 6: Yes, and no, there's a great phrase in medicine that's

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Speaker 6: worth remembering here, the dose makes the poison. A lot

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Speaker 6: of companies did this. They created these dual class structures.

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Speaker 6: They did a lot of things because the financial markets

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Speaker 6: and sort of pressure from in Wall Street had made

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Speaker 6: it impossible for them to manage companies for the long term.

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Speaker 6: They realized that that was toxic. They looked, say at Boeing,

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Speaker 6: and said, we don't want to be Boeing, We don't

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Speaker 6: want to be ge We want to be a company

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Speaker 6: that actually creates value over the long term. And so

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Speaker 6: they created these structures to allow that to happen. That

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Speaker 6: was the problem. We have now taken this to the

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Speaker 6: point where the solution looks in a very great sense

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Speaker 6: to be much worse than the problem.

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Speaker 3: So thirty seconds left, Baltham, are you the index issue?

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Speaker 3: How serious is that for investors? Do you think?

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Speaker 6: I think it's in the So in this particular stock.

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Speaker 6: It is not devastating, although it's not good. What it's

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Speaker 6: those very serious our investors, is it is an assault

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Speaker 6: on the integrity of the capital markets, the guarantee that

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Speaker 6: you will be treated fairly, that this is not just

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Speaker 6: a way for insiders to extract money from index investors

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Speaker 6: and from people from people or not who are not,

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Speaker 6: you know, sort of asphiscated as they are right now.

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Speaker 6: This is structured as a transfer of wealth from like

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Speaker 6: investors to early stage space ex holders. That's wrong, and

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Speaker 6: it's that it is. It is really a frontal assault

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Speaker 6: on the thing one of the pillars of American capitalism

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Speaker 6: that has made it so successful.

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Speaker 3: Stay with us.

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Speaker 4: More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Let me take you all the way back to this

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Speaker 2: summer of nineteen ninety one. I was in the Chase

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Speaker 2: Manhattan Bank Summer that credit training program, and we were

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Speaker 2: assigned a company do a full credit report on and

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Speaker 2: do a presentation. That company for me was Medtronic medical

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Speaker 2: device maker. So I followed the company kind of ever since,

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Speaker 2: because when you put in a ton of work on

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Speaker 2: a company, it tends to stick in your brain. Other

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Speaker 2: folks cover the stock as well. They reported some numbers.

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Speaker 2: I thought that looked pretty decent to me. The stock

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Speaker 2: is up five percent today, but it's down about nineteen

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Speaker 2: percent year to date. This is one of the leading

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Speaker 2: medical device makers out there, so let's pay attention to

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Speaker 2: what's happening there. Matt Hendrickson does. He's a senior ecadanas

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Speaker 2: Bloomberg Intelligence, joining us live here in our studio.

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Speaker 3: Here, Matt talk to us about met Metronic.

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Speaker 2: What do you hear from them in their earnings releasing?

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Speaker 7: Yeah, I mean so, going in ahead of the call,

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Speaker 7: the question was for one of their key technologies, whether

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Speaker 7: it was a market slowdown or a competitive dynamic. The

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Speaker 7: previous company reporting, Boston Scientific talked about slow down, turned

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Speaker 7: into what was going to happen? When Metronic reported, they

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Speaker 7: reported very positive one hundred and twenty four percent growth

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Speaker 7: in this one secondment.

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Speaker 8: Eased a lot of concern ahead of the call. That's

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Speaker 8: why you're.

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Speaker 7: Seeing the bump this morning, right, and so turning into

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Speaker 7: their fiscal twenty twenty seven guidance shows signs of upside

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Speaker 7: in the future because of that momentum in that segment.

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Speaker 2: A medical device maker like Metronic, how much how much

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Speaker 2: are they impacted by healthcare policy out there? It seems

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Speaker 2: like it's such a a You guys have to figure

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Speaker 2: out what the earning is going to be and all

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Speaker 2: that kind of stuff, and Josto have to have an

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Speaker 2: opinion on it and of how policy is gonna unveil

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Speaker 2: over the next several years.

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Speaker 8: Yeah, it's it's it's tough. It's always a labyrinth.

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Speaker 7: It's a black box what's going on in the CMS

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Speaker 7: and the FBA. Medtech is a little bit less impacted

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Speaker 7: by it. You're gonna have procedure volumes, you have the

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Speaker 7: aging demographic, They're gonna have me procedures done. They're gonna

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Speaker 7: have heart surgery done, things like that. Recently, it's more

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Speaker 7: been the g LPs and so I remember two three

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Speaker 7: years ago when glp's first came out, everyone thought medtech

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Speaker 7: was dead. They were able totain procedure volumes. Now, with

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Speaker 7: the rise of oral glps, that is kind of coming back.

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Speaker 3: So what's the thinking there, what's the thesis.

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Speaker 7: Basically, it's easier to take a GLP orally as a

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Speaker 7: pill versus injecting.

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Speaker 3: Yourself for all the fewer knee replaces.

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Speaker 7: There's there's there's data out there that's showing that it's

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Speaker 7: it aids with cardiovascular cases, things like you know, healthier knees,

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Speaker 7: things like that, So less procedures there. What we saw

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Speaker 7: in twenty twenty four twenty twenty five is that cases

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Speaker 7: were steady throughout the whole and if not growing interesting

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Speaker 7: but once again we're getting into that new case of

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Speaker 7: uncertainty going on.

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Speaker 2: I was talking to Buddy Mind. He's that the doctor

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Speaker 2: that fixes his knees and ankles and stuff like that.

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Speaker 2: It's just pick aball has been a boon to his business.

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Speaker 2: His office is packed with people my age coming in

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Speaker 2: with torn up knees and ankles because they're playing pickleball.

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Speaker 8: You're you're not the first one to say that, because

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Speaker 8: I mean, think about it.

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Speaker 7: They're just so they're so eager to get out there

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Speaker 7: and they forget that they're in there's sixties and seventies

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Speaker 7: and next thing you know, crack. And then got to

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Speaker 7: get to the surgeon.

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Speaker 2: So who does Metronic compete against in their business?

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Speaker 7: So well, Metronics is very diversified, and so we can

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Speaker 7: talk about the cardiovascular space, the spine space, neuroscience for

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Speaker 7: particular this case pulse field ablation, which was not there

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Speaker 7: in nineteen ninety one. It's a new technology for cardiac ablation.

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Speaker 7: The two main competitors is Boston Scientific and Metronic. And

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Speaker 7: it turned into that question when Boston reported growth numbers

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Speaker 7: that were lower than expected, what was going to happen

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Speaker 7: to Medtronic? And so today was a kind of a

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Speaker 7: clear that hurdle at.

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Speaker 2: Least did these medical device companies like Metronic? Are they

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Speaker 2: aggressive on the acquisition front? Is that a growth driver

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Speaker 2: for them? Because I always joke with Sam Fazzelli his

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Speaker 2: pharma companies, every Monday morning, we wake up, there's another

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Speaker 2: farm of deal.

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Speaker 7: It's a it's a huge way for them to drive

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Speaker 7: that innovation that basically they acquire the innovation to be

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Speaker 7: able to maintain their revenue growth trajectory in the future.

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Speaker 8: So it's huge.

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Speaker 7: The difference that we're starting to see in medtech side

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Speaker 7: versus the pharmacide is that they're targeting the private companies

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Speaker 7: earlier in their series financing before they become publicly traded.

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Speaker 7: While Sam was probably talking about a lot of the

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Speaker 7: publicly traded companies that have been acquired over the last

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Speaker 7: few months.

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Speaker 2: So what's the call on Medtronic here? I'm just looking

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Speaker 2: at the an R function on the Bloomberg terminal. It's

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Speaker 2: kind of streets kind of split here. I got seventeen

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Speaker 2: buys but fourteen holds here. So what's kind of the

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Speaker 2: Is there something Streets looking for to say, Okay, I

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Speaker 2: can jump on board here.

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Speaker 8: I think people are waiting for.

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Speaker 7: It's always been an execution story for Medtronic, and it's

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Speaker 7: always been kind of Lucy pulling the football from you,

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Speaker 7: and they would have one or two great quarters. They

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Speaker 7: always talked about the great innovation, and the innovation always

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Speaker 7: has been promising for you know, whether it's pulse field ablation.

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Speaker 7: There's a few other ones that we can go into

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Speaker 7: the nitty gritties of it at another time. But all

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Speaker 7: this technology that is disrupting the standard of care, but

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Speaker 7: for whatever reason, the sales team or just the execution

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Speaker 7: wasn't there, So they would always have to revise something

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Speaker 7: after the third quarter, and then things would then retrace

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Speaker 7: from those kind of momentum that they had earlier. It's

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Speaker 7: kind of so basically there is that a little bit

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Speaker 7: of I don't want the some that I don't want

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Speaker 7: to try to kick the football for Lucy just to

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Speaker 7: pull it from me.

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Speaker 3: Yep.

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Speaker 8: And so they've had a bunch of good quarters.

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Speaker 7: It's going into you know, they issued fiscal twenty twenty

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Speaker 7: seven guidance that's showing that momentum from fiscal twenty twenty six.

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Speaker 7: A lot of it has to do with the Polsfield

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Speaker 7: ablation segment of their business that's showing some strong momentum.

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Speaker 7: So we'll see what happens come August with the fiscal

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Speaker 7: first quarter calls coming out.

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Speaker 4: Stay with us more from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live

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Speaker 1: weekdays at ten am Eastern on Apple Coarclay, and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or what us Live on YouTube.

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Speaker 2: In terms of earnings, Macy's reported some pretty good numbers.

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Speaker 2: Stocks trading up here today one and a half percent.

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Speaker 2: Let's break it down with Mary Ross Gilbert. She covers

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Speaker 2: the retailers for Bloomberg Intelligence. She's based out there in

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Speaker 2: Los Angeles.

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Speaker 3: So, Mary, what do we hear from Macy's.

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Speaker 9: Well, what you're hearing from Macy's, Paul, is that they're executing.

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Speaker 9: That's what you're hearing. So what we saw on the quarter,

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Speaker 9: their comps were up three percent. We had very strong

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Speaker 9: gains from Bloomingdale's being up ten percent. And what the

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Speaker 9: company is doing is they're bringing in a lot more

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Speaker 9: relevant brands. First of all, they had already been executing

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Speaker 9: it Bloomingdale's, but they're even taking it to a next level.

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Speaker 9: So I think I mentioned before last quarter how they

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Speaker 9: brought in our local store here in Westfield Century City.

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Speaker 9: They brought in a Chanelle shoe boutique that was brought

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Speaker 9: in over a year ago, and then just this year

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Speaker 9: they brought in Christian Lubaton. Well in New York City

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Speaker 9: in the fifty ninth Strength Street location, they have a

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Speaker 9: praduct shoe boutique. So what they're doing is just continuing

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Speaker 9: to elevate. This is also happening on the macy side too,

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Speaker 9: where they're really climbing up in terms of the brands

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Speaker 9: that they're bringing in. So some of the brands that

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Speaker 9: they mentioned include Mango is one of them. They're also

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Speaker 9: doing a whole activation for World Cup with Nike Audidos

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Speaker 9: and also Puma. So very exciting things that the company

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Speaker 9: is doing. And if you look online at their website,

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Speaker 9: it has completely changed. It's a lot more engaging, it's

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Speaker 9: a lot more exciting. So they're really and there's more

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Speaker 9: to come. So even with the nice game that we

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Speaker 9: saw this quarter, I think we're going to continue to

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Speaker 9: see that momentum build.

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Speaker 4: And Jessa heads up to everyone that Macy COEO Tony

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Speaker 4: Springwomb will be on Bloomberg Television today live at four

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Speaker 4: thirty pm speaking with Romaine Bostik, so we can get

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Speaker 4: more detail from the CEO. And I bring that up

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Speaker 4: because I feel like Macy's, the company, Bloomingdale's in particular,

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Speaker 4: was definitely a winner here. Following the bankruptcy filing of

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Speaker 4: SAX Global Enterprises, the parent company of SAX Fifth Avenue,

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Speaker 4: which has had to shut down a lot of stores.

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Speaker 8: Is that the case?

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Speaker 9: It absolutely is the case, Scarlet. We've been noticing this

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Speaker 9: and it actually really started last year and we saw

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Speaker 9: the sharp acceleration in Bloomingdale's sales ahead of the bankruptcy

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Speaker 9: actually because of the miss execution that was going on

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Speaker 9: when they acquired Nieman Marcus, and Nieman Marcus, which had

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Speaker 9: been showing positive sales trend, turned sharply negative following that acquisition.

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Speaker 9: So you can see that the consolidated chain, they weren't

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Speaker 9: paying vendors, they weren't treating their customers. While not accepting returns,

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Speaker 9: they couldn't get a lot of these customers who were

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Speaker 9: frustrated couldn't get in touch with anyone. So meanwhile, while

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Speaker 9: Bloomingdale's was really elevating their execution, they're taking share essentially.

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Speaker 9: And so I think we're continuing to see that because

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Speaker 9: even if we look at the transaction data, we can

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Speaker 9: see that the sales are still down double digits at

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Speaker 9: the consolidated Nieman Marcus group. So so the SAX global When.

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Speaker 2: You talk to your retailers, are they trying to go

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Speaker 2: just generally more upscale. I'm thinking about this case case

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Speaker 2: shaped economy, and the parts of the case seem to

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Speaker 2: be getting more and more pronounced. So if you're Macy's,

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Speaker 2: maybe on the margin I go a little higher end.

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Speaker 2: That brings some brands into maybe I wouldn't have had

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Speaker 2: them to pass.

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Speaker 3: Are you hearing that?

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Speaker 9: We're absolutely hearing that to a certain extent, though, Paul,

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Speaker 9: you raise a valid question. It's also important that you

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00:21:49,000 --> 00:21:52,800
Speaker 9: have those entry brands, and you saw this with Cohle's.

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00:21:52,840 --> 00:21:56,320
Speaker 9: That's really where their focus is because their consumer is

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00:21:56,400 --> 00:22:00,560
Speaker 9: really that lower income that's our core consumer. Macy's will say,

442
00:22:00,720 --> 00:22:04,920
Speaker 9: our core consumer is really middle income to upper income,

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00:22:05,320 --> 00:22:08,560
Speaker 9: and so they have to make sure they have sort

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00:22:08,600 --> 00:22:12,879
Speaker 9: of those entry levels. So it's called really the good, better,

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00:22:12,920 --> 00:22:18,199
Speaker 9: and best classifications. But yes, they're really pushing their merchants

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00:22:18,240 --> 00:22:22,440
Speaker 9: to focus on going up the best chain because they're

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00:22:22,520 --> 00:22:25,000
Speaker 9: finding that having newness.

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00:22:25,040 --> 00:22:26,600
Speaker 3: Will drive conversion.

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Speaker 9: So bringing in new, fresh, exciting brands and classifications are

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Speaker 9: really driving that that incremental sales gain. And their average

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00:22:38,280 --> 00:22:41,560
Speaker 9: price was up eight point three percent, so you had

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Speaker 9: at the Bloomingdale side it was up about nine to

453
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Speaker 9: ten percent, but Macy's the name plate was up mid

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Speaker 9: single digits, and where they saw strength and beauty once

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00:22:50,720 --> 00:22:54,600
Speaker 9: again driven by a lot of newness across skincare and

456
00:22:54,680 --> 00:22:57,840
Speaker 9: fragrance driving those gains there. So that really does make

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00:22:57,840 --> 00:23:00,720
Speaker 9: a difference, but it is important to have that good, better,

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00:23:00,800 --> 00:23:05,080
Speaker 9: and best classifications, not just in private labels. So they're

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00:23:05,119 --> 00:23:08,399
Speaker 9: bringing in some of these entry level brands you know,

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Speaker 9: or extending those like a Sam Edelman for example.

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